It has been another eventful year for the Independent Commission Against Corruption (ICAC). There have been further developments in the Obeid saga, with the ICAC successfully defending proceedings brought against it by the Obeids and of course the year concluded with the sentencing of Mr Edward Obeid Snr. The ICAC also released its report in Operation Spicer, the investigation into NSW Liberal Party donations. However, what was possibly the most controversial development was associated with neither a public hearing nor a report, but was rather the amendments to the Independent Commission Against Corruption Act 1988 (NSW) (the Act), changing the structure of the ICAC, which Commissioner Megan Latham described as measures which would "fundamentally weaken" the organisation, prior to announcing her resignation. This stands in contrast to years in which a premier and clutches of other elected representatives have resigned following brushes with the organisation.
We take a look at the key events of 2016.
Proceedings by the Obeids
Mr Edward Obeid Snr, Mr Moses Obeid, Mr Paul Obeid and Mr Edward Obeid Jnr brought proceedings in the NSW Supreme Court against the ICAC, former ICAC Commissioner, Counsel assisting the Commission and two ICAC investigators, in relation to Operation Jasper. The plaintiffs alleged that they were denied procedural fairness from the ICAC and that the defendants engaged in the tort of public misfeasance.
The plaintiffs claimed they were denied procedural fairness on multiple grounds, one being because the ICAC did not disclose certain matters to them and accordingly, the plaintiffs were denied the opportunity of leading evidence, making submissions and changing the outcome of the inquiry.
The Court held that the failure to disclose to the plaintiffs certain matters did not deny the plaintiffs an adequate opportunity to be heard or a possibility of a successful outcome as: the plaintiffs were provided with sufficient opportunity to be heard and to deal with the issue; even if the matters were disclosed, the plaintiffs would not have taken a different course; and, there was no alternative course practically open to the plaintiffs which could have led to a different outcome.
The plaintiffs claimed damages from the defendants for misfeasance in public office. This claim failed against all of the defendants for the following reasons:
- In relation to the ICAC, the Court found that because the plaintiffs were not denied procedural fairness, the ICAC did not engage in public misfeasance. The Court also stated that there was a live question about whether the ICAC (as it is not an individual) could commit a tort and noted that this may turn on the particular power being exercised by it. Furthermore, given the personal nature of the tort, there was difficulty in accepting the plaintiffs' submission that the state of mind of the ICAC's employees or Counsel assisting the ICAC should be attributed to the ICAC.
- In relation to the Commissioner, the plaintiffs could not establish that the Commissioner, in making a suppression order, acted beyond power or was recklessly indifferent as to whether he was in excess of power.
- In relation to Counsel assisting, the Court found amongst other things that he did not hold public office and did not hold any public power.
- In relation to the ICAC investigators, the Court found that they did not hold public office. Furthermore and although it was unnecessary to consider, whilst the investigators knowingly acted in excess of their powers, the plaintiffs did not prove that they suffered any damage.
Mr Edward Obeid Snr was found guilty of misconduct in public office in June relating to his failure to disclose his family's interests in the Circular Quay café leases, investigated by the ICAC in Operation Cyrus. In December he was sentenced to five years' imprisonment with a non-parole period of three years. Justice Beech-Jones noted that corruption by elected representatives destroys public confidence in democratic institutions and that the "general need for deterrence, denunciation and recognition of harm done to the community" were the main considerations when determining the appropriate sentencing period. The Court also took into account Mr Obeid's personal circumstances including his health, age and prior good conduct in imposing the sentence. Mr Obeid has since been refused bail, pending an appeal against the sentencing decision. The appeal is set to be heard on 15 March 2017.
Operation Spicer Report
In August the ICAC released the report of Operation Spicer, an investigation into allegations that certain NSW Liberal candidates solicited and received undeclared and prohibited donations in relation to the 2011 state election campaign.
The ICAC found that former Labor minister Mr Joe Tripodi misused his position in parliament by providing confidential information to developers in the hope that he would secure future benefits. Other key findings in the report include:
- the Free Enterprise Foundation was used to channel donations to the NSW Liberal Party for its 2011 state election campaign, disguising the true donors;
- donations were received and channelled through a sham company called Eight by Five, for the benefit of the NSW Liberal Party campaign on the Central Coast; and
- former Liberal minister Mr Chris Hartcher was involved in the establishment of Eight by Five and took an active role in using the business as a channel for political donations. The ICAC also recommended that the DPP consider charges against Mr Hartcher for larceny.
The Independent Commission Against Corruption Amendment Act 2016 (NSW) (the Amendment Act) was assented to on 23 November 2016 and is expected to commence in 2017.
The Amendment Act, which has as its object to change the "structure, management and procedures of the ICAC", arose out of recent controversy in particular in relation to Operation Hale. The controversy made way for a Joint Parliamentary Committee Report which was tabled in the NSW Legislative Assembly on 27 October 2016.
Most notably under the amendments, the ICAC will be expanded to provide for three Commissioners, comprising a Chief Commissioner alongside two other Commissioners.
Concurrent with the introduction of two additional Commissioners, section 6 of the Act will be amended to require the authorisation of both the Chief Commissioner and at least one other Commissioner before a public inquiry can take place. The rationale is to help balance the reputational damage inherent in public inquiries with the benefits of exposing corruption.
The restructure will also see the introduction of a Chief Executive Officer, responsible for the day to day management of the organisation. A new section 79A is set to address reputational risks associated with appearing before the ICAC by preventing it from including adverse findings against a person in a report unless they have been given an opportunity to respond to the proposed adverse findings. Further, the inclusion of section 31B will require the Commissioners to issue guidelines on conduct of public inquiries to the staff of the ICAC and to counsel appointed to assist the ICAC.
Commissioner Latham responded describing the amendments as an unprecedented attack on the independence and effectiveness of the ICAC and criticised the lack of consultation process with relevant stakeholders. Among Commissioner Latham's concerns is that the structural changes (in particular the ability of each Commissioner to exercise the Commission's functions independently) will fracture the ICAC and lead to inconsistency in the performance of its function. Ms Latham accused the State Government of an "unprecedented attack" on the independence of ICAC, and warned that the new three commissioner model would "fundamentally weaken" the organisation. Ms Latham had two years of a five year term as Commissioner of the ICAC remaining, and will be returning to her former role as a Justice of the NSW Supreme Court.
In 2017 will we see the impacts of the new three commissioner model? Will data on instances where dual authorisation is not obtained be collected and reported in order to test whether the model will serve as a genuine pause for review or merely a rubber stamp? What new and novel attacks will we see from affected persons? With so much at stake, the year ahead is unlikely to be without controversy.
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